IRS Installment Agreement Payment Calculator

Estimate your required monthly payment under an IRS Installment Agreement, including accrued penalties and interest on your outstanding tax balance.

IRS interest = Federal Short-Term Rate + 3%. Default: 8% (2024 Q4).
Used to calculate accrued interest and failure-to-pay penalty before the agreement starts.

Formulas Used

1. Failure-to-Pay Penalty (IRC §6651(a)(2)):
FTP = Tax Balance × 0.5% × months overdue (max 25% of balance)

2. Failure-to-File Penalty (IRC §6651(a)(1)) — if return unfiled:
FTF = Tax Balance × 5% × months overdue (max 5 months = 25%), reduced by FTP for same period (net 4.5%/month)

3. Accrued Interest (IRC §6601) — daily compounding:
Daily Rate = Annual Rate ÷ 365
Interest = (Balance + Penalties) × [(1 + Daily Rate)days − 1]

4. Total Balance at IA Start:
Total = Original Balance + FTP Penalty + FTF Penalty + Accrued Interest

5. Monthly Payment (standard loan amortization):
Monthly Rate (r) = (1 + Daily Rate)30.4375 − 1
M = Total Balance × [r × (1 + r)n] ÷ [(1 + r)n − 1]
where n = number of months in repayment term

6. IRS Interest Rate:
IRS Rate = Federal Short-Term Rate + 3% (IRC §6621), compounded daily (IRC §6622)

Assumptions & References

  • IRS interest rate = Federal Short-Term Rate + 3%, compounded daily per IRC §6621–6622. Default shown: 8% (Q4 2024).
  • Failure-to-Pay penalty: 0.5%/month, max 25% of unpaid tax (IRC §6651(a)(2)).
  • Failure-to-File penalty: 5%/month (max 5 months = 25%), reduced by FTP penalty for same period (IRC §6651(a)(1)).
  • Guaranteed IA: balance ≤ $10,000, term ≤ 3 years, no financial disclosure required (IRC §6159(c)).
  • Streamlined IA: balance ≤ $50,000, term ≤ 72 months; Expanded Streamlined: ≤ $100,000, ≤ 84 months.
  • Custom/Non-Streamlined IA: IRS may require Form 433-A (individuals) or 433-B (businesses).
  • IRS user fees per Rev. Proc. 2023-1 and IRS Fee Schedule: $31 (direct debit, online), $130 (non-direct debit, online).
  • Low-income taxpayers (income ≤ 250% federal poverty level) may qualify for reduced/waived fees via Form 13844.
  • Penalties and interest continue to accrue until the balance is paid in full.
  • This calculator does not account for partial payments, prior credits, or Currently Not Collectible (CNC) status.
  • Sources: IRS Payment Plans, IRC §§6159, 6601, 6621, 6622, 6651.

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